Startups: How to fundraise in 2024

Finding a fitting investor for your startup is difficult in the early stages (pre-seed and seed). If you don't have the track record to show your capabilities, you have to rely on a plan and presentation. The risk is higher for the investor, but so is the reward.

So what is it that an investor wants to hear to dare to commit to your venture?

I've listed 5 things to keep in mind when presenting your startup to a potential investor.

5 things to secure your next investment in 2024

Know your investor

When you're an early-stage startup, you will most likely be too small to interest a venture capital fund, nor would you need that type of money. You might also not have the runway to stay patient through their due diligence process, which is lengthy, as you're just one out of many startups they are considering.

Many early startups bet on angel investors. Interested individuals with expertise, know-how, who have their own finger in the game in one way or another.

If you're a smaller team at an early stage, bringing in an investor who doesn't only contribute funds, but also strategic know-how and a network, you might be adding significant value to your company.

The one thing to know about angel investors is that they don't invest in things that they don't understand. So in order for you to find the right investor, you need to find those who know what you're talking about almost as much as you do. People with expertise in your area who have spotted the problem you're solving and can recognize a good solution because they are familiar with the issues at hand.

Here, you aren't telling stories and narratives about your potential market. Here, you are telling your potential investor what you've made that solves a problem. This might be the place where your potential investor tells you that your product might not be up to par, or that they've finally found the company who has invested the time and effort to develop something they've seen for a longer period of time.

So what would tick them off?

Become a problem expert

If you have been exposed to as many startups as I have, you quickly learn to tell who is actually solving a problem, and who simply had an idea.

Customers don't buy ideas, they buy solutions, so investors quickly learn how to differentiate between the practical and the hypothetical.

If you are an early-stage startup, and you don't have any paying customers yet, you will have to specify in depth what the issue is and how your solution actually solves it.

The expert investors will know if you are actually solving the problem or not, and if you're on the right side of the story, you'll have yourself an investment.

So how do you make the right connection with your potential investor?

Don't hide your needs

I've seen more than one startup founder get uncomfortable when it comes to presenting their needs. I can't claim that I can always accurately pinpoint the reason, if it's ego or shame, or fear of showing vulnerability, but whichever reason it is, it's harming your relationship with your potential investor.

When you're in front of your investor, do yourself a favor and be upfront about your need. You are asking for an investment because you need an investment. You know it, your investor knows it, and there is absolutely no reason to tiptoe around the topic.

Present your needs humbly and confidently, because asking for investment is not a power struggle, it's a beneficial partnership.

If you get a 'no' then it's a 'no', there is a 'yes' around the corner. So knowing that you have options, what kind of investment should you look for, and what is your investor investing in?

Plan your next step

Every early startup is essentially on the same path: staying alive until it makes money and can invest in itself. Thankfully, most early stages, no matter what industry, look fairly similar. Depending on your stage you're most likely showing your 'proof of concept', or finding your 'early adopters'.

Either way, you will need to tell your investor what their funds are going to. They will want to know what your next step is, at what stage in the process you are, and what you plan to do afterward. Most importantly, they want it on a timeline.

If you are talking to an investor who has invested in previous early-stage startups, they are most likely buying small ticket investments and looking for their next unicorn. If they are smart, they know how to differentiate between speculation and traction.

What is your investor putting money into? Have you garnered interest from potential clients and need to supply them with more samples? Are you commercializing your facility and expanding?

Be clear and upfront about your next step and remember, this could very well be a stage where an investor who says 'no' or 'only if' might give you valuable insights into how to succeed in your next stage. So if your investor gives you conditions, what should you do?

Be ready to adapt

If you are in your early stage, a small fish, catching a ride with an angel with a network is more than beneficial. In fact, there are many benefits in finding an investor who provides more than just capital, and if the money comes with conditions, make sure to take time to consider if the required conditions might actually be preferable compared to your previous plan.

Your investor might not want more of your company, their conditions might be tried and tested ways to get your company off the ground that have come from previous success and even more previous failures, from lessons learned.

If you're looking for your next investment for your startup, don't hesitate to reach out.